Various essentials of personal bankruptcy
Personal bankruptcy law allows an individual to declare bankruptcy. Almost every country brings forward some form of debt relief. Personal bankruptcy is different from corporate bankruptcy. In U.S. constitution one has the ability to relieve all or part of their debts when they can no longer make the payment to the creditors or lenders. There are two major types of personal bankruptcy chapter 7 bankruptcy and chapter 13 bankruptcy.
Chapter 7 Bankruptcy:- In chapter 7 bankruptcy debtors are released from all or part of their debts. Under chapter 7 bankruptcy all or part of the debts are released after liquid assets are used to repay some of the debts. Liquid assets are assets which can easily be converted to cash for e.g. savings accounts. Some of the liquid assets are handed over to the court for the repayment of the debt to the creditors. There are two types of liquid assets exempt and non-exempt. State law determines which assets exempt and non-exempt. Once the non-exempt assets are used to pay the creditors the individual is no longer liable to pay the debt to any of the creditors.
Chapter 13 Bankruptcy:- In chapter 13 bankruptcy the individual repays all or part of the debt via a three to five years repayment plan. While filing bankruptcy the plan for repayment is also needed to be submitted to the court. As soon as one submits the plan he or she should begin to start the payment. After a few weeks there will be hearing to approve the plan. After the approval of the plan one will continue the payment and the remaining debt is cleared at the end of chapter 13 payment plan.
Canadian Bankruptcy:- The concept behind Canadian bankruptcy is to surrender everything you own to a trustee in bankruptcy in exchange to discharge the debts. Through Canadian bankruptcy person overly burdened with debt can start fresh. Personal bankruptcy in Canada is a legal process administered by “The Bankruptcy and Insolvency Act”. The law is intended to allow an honest but unfortunate debtor to discharge from the debt and at the same time treating creditors fairly. To go into Canadian bankruptcy a person must be Canadian citizen or be doing business in Canada and must be insolvent. To be insolvent means to owe at least $1,000 and not to be able to pay the debts as they are owed to be paid.
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